Amazon.com
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What type of market structure does Amazon have? Can any of the economic ratios or indices be applied to Amazon (four-firm concentration ratio, Herfindahl-Hirschman index, Lerner index, Rothschild index)?
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Solution Summary
The first major Internet retailer, Amazon.com, and its market structure is examined.
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The first major Internet retailer, Amazon.com, began of course as a book-selling specialist, is an example of oligopoly industry. Oligopolies refer to a market structure where an industry is dominated by a small number of large sellers .Internet commerce is supporting a trend toward oligopoly, and online bookstores require certain special resources to succeed in this environment.
As prices are set equal to marginal cost in a perfectly competitive environment, firms collectively have market power in an oligopoly, allowing them to set prices above this minimum level. The evidence thus far for Internet retailing shows prices and price dispersion higher than would be expected under the competitive model, giving ...
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